Toronto stock index closes up slightly, U.S. markets, loonie also climb
A man watches the financial numbers at the TMX Group in Toronto's financial district, May 9, 2014. (Darren Calabrese/The Canadian Press)
Ian Bickis, The Canadian Press
Published Friday, August 3, 2018 7:19AM EDT
Last Updated Friday, August 3, 2018 5:42PM EDT
TORONTO -- Canada's main stock index closed up slightly as utilities and materials stocks rose, while the loonie moved higher after strong Canadian export data and moderate jobs numbers out of the U.S.
Markets in Canada and the U.S. were up despite China announcing plans to put tariffs on US$60 billion in U.S. goods in the latest escalation of a trade dispute.
Investors are doing the math on trade disputes and concluding that the worst-case impacts still aren't likely enough to knock the global economy into a recession, said Cavan Yie, a portfolio manager at Manulife Asset Management.
"It would be a material negative, in the event these trade wars escalate into the worst case. It's still not enough to derail the growth story that's synchronized across all geographies at the moment."
The worst case scenario would affect China's economy by about 150 basis points, which is growing in the mid-to-high single digits, said Yie.
"I think the broad consensus might be that cooler heads prevail. And everyone knows that trade wars don't make any sense, and aren't logical."
Canada's export numbers showed some of the effects of the trade disputes, as exports of steel and aluminum to the U.S. were down in June after the U.S. imposed tariffs on the metals, but overall numbers were encouraging.
Statistics Canada reported the lowest monthly merchandise trade deficit with the world in 17 months. The difference between Canada's exports and imports narrowed from a negative $2.7 billion in May to $626 million in June, the smallest deficit since January 2017.
"The net trade balance was pretty healthy, and that should point to a good Q2 GDP result and in our view supports the Bank of Canada's recent hawkish bias," said Yie.
The Toronto Stock Exchange's S&P/TSX composite index closed up 11.08 points at 16,420.24 despite a drop in energy and financial stocks.
The index hit a intraday high of 16,429.12. Volume for the Toronto Stock Exchange as a whole came in at 245.28 million. The TSX index was up 0.16 per cent for the week.
The S&P/TSX capped utilities index had the biggest gains at 0.84, as companies like TransAlta Corp., Hydro One, ATCO Ltd., and Innergex Renewables Energy gained more than one per cent.
Health care saw the biggest drop at 0.59 per cent, while the energy index was down 0.43 per cent.
In New York, the Dow Jones industrial average closed up 136.42 points 25,462.58. The S&P 500 index ended up 13.13 points at 2,840.35 and the Nasdaq composite index was up 9.32 points at 7,812.01.
The Canadian dollar averaged 77.02 cents US, up 0.18 of a US cent. Yie said the rise had likely more to do with U.S. job numbers that were fine, but not enough to shift U.S. federal reserve policy either way, rather than the positive export numbers out of Canada.
The September crude contract closed down 47 cents at US$68.49 per barrel and the September natural gas contract was up four cents at US$2.85 per mmBTU.
The December gold contract ended up $3.10 at $1,223.20 an ounce and the September copper contract closed up two cents at $2.76 a pound.
Aimia Inc. closed up 28 cents, or 8.09 per cent, to $3.74 after the company rejected a bid by Air Canada for its Aeroplan loyalty program. Aimia says it is still open to negotiations with the airline, and is also in discussions with the Oneworld airline alliance on a possible partnership.